Cowen: Buying Apple stock is a ‘no-brainer’ even as it enters a correction

“Apple got banged up last week as it faced its worst losses in nearly two years,” Keris Lahiff reports for CNBC. “The stock officially fell into a correction, plunging more than 10 percent from its high just two weeks earlier.”

“But Dvaid Seaburg, head of sales and trading at Cowen, says Apple has not turned rotten. More than that, this pullback presents an opportunity to buy, he says,” Lahiff reports. “‘At these levels I think it’s kind of a no-brainer,’ Seaburg told CNBC’s ‘Trading Nation’ on Friday.”

“Just look how much cash they have on hand, he said. As of the end of December, the world’s largest company had $77.15 billion in cash and short-term investments. That number should grow once Apple delivers on its pledge to repatriate billions from outside the United States. Last year, the company said it had just over $252 billion in cash held overseas,” Lahiff reports. “‘You’ve got this sort of cash on hand that they could do something with. If they flex their muscle and start to return cash to shareholders or make some sort of meaningful acquisition, that could be transformative,’ said Seaburg. ‘The stock will be off to the races.'”

“Apple got banged up last week as it faced its worst losses in nearly two years,” Keris Lahiff reports for CNBC.

Taken at face value and literally, this statement is a lie. Apple had absolutely ZERO losses. Even the iPhone sales (a point of contention by some analysts) were up on a week by week basis.

Yes, the asking price of each share of AAPL stock dropped quite a bit, but that has no direct bearing (unfortunately) on the sales and profits of Apple itself and is not directly derived from those sales and profits. It’s just another example of the price of stocks in the market is all about perception of reality and not about reality itself.

All reporting organizations (including MDN) strongly and actively need to remind these analysts that their statements are false (or at least skewed in the extreme) whenever they are.

I have never doubted that the analysts know that what they are saying is hopelessly misleading. Most analysts get rewarded for persuading people to buy or sell shares. There’s nothing in it for the analysts by telling people that everything is fine and that you should hold onto your shares.

Churn makes the investment world go around! They make money going up or down.

I once humored myself by scheduling an introductory session with a financial planner. He tried to tell me that I should not max out my 401K, instead investing in financial products issued by his employer. Naturally, he would get a nice commission on shifting those assets over to his company. After that, I figured that his nice and helpful nature would end along with his interest in me, assuming that he did not plan on trying to churn me again. As you might expect, I did not return. Anyone with half a brain can do a better job on their own and save the fees and commissions.

Money will continue to pour into Amazon and the rest of the FANG stocks. Boeing is a rock. Microsoft is a rock. Both were barely touched by the market correction. Apple… pffft. A relatively low tech company P/E and a mountain of repatriated cash can’t even hold Apple shares up.

I realize Apple is doing well but that doesn’t matter to greedy big investors. They want a lot more. Apple absolutely will not deliver large revenue gains or iPhone sales gains and therefore Apple will continue to be frowned upon. There’s just too much doubt surrounding Apple and combined with constant negative news articles about Apple products, it’s too much for big investors to be bothered with. When was the last time anyone had something negative to say about Amazon or any Amazon products like their Echos or tablets? Nada. Zip. Everything Amazon does is considered successful and perfect. Every damn product Apple offers is chopped to pieces as being sub-par or faulty.

Apple stock will continue to lag behind the FANG stocks, Boeing and Microsoft. Apple’s P/E will stay compressed. Hope for Apple reaching a $1T market cap is gone. Most of that repatriated cash is going to buybacks and little else. I don’t think Apple creating jobs is going to make Apple more valuable. No major acquisitions and no large dividend increases certainly won’t pull big investors to buy Apple stock. Tim Cook is ultra-conservative unlike Bezos or Musk who like to take big chunks out of the competition’s butts. Apple will continue to muddle along but that’s about it. No serious investor excitement will be forthcoming. Constant news media attacks will soil Apple’s reputation for good. Most of those pre-earnings analyst stories were fakes but Apple’s value was harmed just the same. No fake stories for the FANG stocks, though.

If big investors believed in fake news which meant they are not smart enough to see a mountain of cash Apple hoarding each quarter. Eventually, Apple repurchases most of its shares would increase its stock values. In another word, Apple alone can prove big institutions are wrong. Apple can flex its muscles by doing what it’s doing best.

People need to keep in mind that Apple has accumulated some long term debt to fund its U.S. buyback program. That debt, along with the reduced repatriation tax, will offset a fair amount of that cash and securities – perhaps $80B or $90B? I do not recall Apple’s current debt. That still leaves a lot of cash and securities after achieving zero debt, but I am a stickler when it comes to being accurate when it comes to math and numbers, especially when engineering or finances are concerned.